Don't kid yourself - in the ancient world, that's exactly what it was. Name a powerful ancient empire that didn't practice slavery. Greece? Rome? Egypt? The advanced civilizations of the Americas (Aztec, Inca, etc), even, are distinguished from their tribal neighbours in that they all practiced slavery on a huge scale (and used it to build an abundance of massive stone structures). All of them utilized vast numbers of slaves. Two-thirds of Athens population, for instance, were slaves. In many parts of Rome, including the city itself, the number was about one-third. This translated to a massive production capacity for all these groups because they could mobilize huge labour forces directed towards planned projects. These people may have been equally productive had they been free, but it would be impossible to mobilize them in the same way. They'd be producing trinkets and tools and art, not roads and walls and pyramids.
There were many skilled slaves. Rome had slaves who were artisans of all sorts - blacksmiths, skilled craftsmen, etc. Any debtor became a slave, so there was no shortage of skilled slaves. Some even served as accountants and scribes.
Absolutely they did! Rome enslaved a huge portion of its own population through debt, for instance. Some slaves came from conquest but the majority were simply debtors, or children who had been sold into slavery.
Those did not make up the majority of the slave population in many cases - there are not enough of those people to account for the massive numbers of slaves in ancient societies like Greece or Rome. Slaves included skilled artisans (blacksmiths, carpenters etc), farmers, and even minor officials - whoever had fallen into debt, came afoul of the law, etc - productive people. In Egypt, everyone was a sort of seasonal slave - between harvesting and sowing, the population went to work for the state, a kind of tax paid in labour rather than goods.
I think alot of people just assume that ancient slavery was like slavery in the southern US before the Civil War. It was not, it was a completely different phenomena altogether and didn't work anything like that. Slavery did indeed pose problems for ancient civilizations, but in the early period no great power did not practice slavery on a massive scale. It must be remembered at this point in history, there is no industry, no labour-multipliers, and everything was done by labour power unassisted. The Pyramids, the Great Wall of China, etc. Mobilizing free labour on that scale is simply impossible - they may have produced just as much if they were free workers, but it would be production of a different nature.
Eventually slavery posed a problem for Rome, as the institution of slavery led to a number of problems. Slaves, working in numbers together, gave birth to organized mobs. Away from the city, local slaveowner bosses became increasingly powerful and began to dominate the economy, and were able to flex considerable political muscle to the degree they filled the provincial offices and then declared the positions heritable, which had an enormous decentralizing effect (the beginning of feudalism). Slavery in the game should, imho, be represented by a decentralizing effect - a very, very high maintenance cost so that expansion beyond a certain point is curtailed, or stability is threatened if one chooses to expand anyway.
But slavery was, and should be, a must for early civilizations - it enabled them to build their massive monuments and great public works, the likes of which were not seen again until the industrial era. The chief problem is in making slavery translate to a problem for moderately advanced (ie middle ages) civilizations, so they are forced to move to serfdom or the caste system.